The NSW government's carbon tax payback?

Delta Electricity has closed the Munmorah power station amid more fanfare than was due given it has been on standby for two years and was due to permanently close in 2014. That's what happens when you close a coal-fired power station the week of the introduction of a price on carbon – everything is taken out of all proportion.

But just how much was the timing of the closure a coincidence?

There has been claim and counter claim from politicians and Delta management over this week's decision to close the plant. Climate Change Minister Greg Combet has suggested the NSW-government owned Delta is just trying to “add to the Liberal party scare campaign” over the carbon tax. Delta boss Greg Everett has insisted it was not timed around the introduction of the legislation.

In the AFR yesterday, Everett was quoted as saying, “This is not a carbon stunt. We realise it's the third of July and people will come to that conclusion, but we have come out now because we have only just got the approval from our shareholding ministers.”

The “shareholding ministers” to which Everett refers are NSW Treasurer Mike Baird and NSW Finance Minister Greg Pearce.

Delta informed Climate Spectator the company went to the state government with the plans to shut Munmorah at the end of March. The utility received approval from the NSW shareholding ministers for closure toward the end of last week. Given it had been with the state government for three months, the timing is suspicious at first glance. Especially given Baird and Pearce, and the Liberal NSW government in general, have been firm in their anti-carbon tax message.  Then again, three months for a decision is hardly slow when it comes to government, one could even contend it lightning fast.

The closure of a power plant is a big decision, even if it has been reduced to a standby plant for two years. It may normally take one month, or three months, or perhaps six months – it's hard to say as a power plant as big as Munmorah doesn't close every year.

Munmorah is a symbol of the NSW government's displeasure with carbon tax compensation. It could not participate in the federal government's contracts for closure scheme – something the NSW government had looked into last year before the criteria was released – as its carbon intensity fell short of the threshold figure. It also failed to receive any compensation from the government for the carbon tax, along with all of NSW's generators, save for Redbank power station, which is one of the privately-owned plants in the state.

This has caused consternation in New South Wales as their feeling is the federal government has favoured the privately-owned brown coal generators in South Australia and Victoria over the state-owned black coal facilities in New South Wales.

As a result, the NSW government has long seen themselves getting the raw end of the stick compared to their southern counterparts and in the federal government's eyes this is one form of payback – but we may never know for sure.

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